TOKYO (MNI) – Japanese Finance Minister Jun Azumi and visiting U.S.
Treasury Secretary Timothy Geithner said on Thursday that they confirmed
their agreement that emerging market exchange rates should be more
flexible against major currencies.

The two policymakers also told reporters that while Washington
supports Tokyo’s initiative to reduce crude oil imports from Iran, Japan
needs more time to deal with non-oil trade with the key Middle East oil
supplier.

Azumi said Japan’s past experience in allowing the yen to rise
against the dollar and other currencies may not necessarily be useful
for China as the two countries have different economic structures.

Geithner, who visited Beijing this week, said China’s economic
growth is slowing to a more sustainable pace and the Chinese authorities
are containing price pressures.

On exchange rate issues, Azumi said, “I also would like to seek a
more flexible Chinese yuan exchange rate that reflects economic
fundamentals.”

“We have to take action against excessive and speculative
(currency) moves but in the case of China, I will ask China to make its
currency regime more flexible, together with the U.S., based on the
request from the international community.”

Geithner declined comment on what he thinks about Japan’s massive
yen-selling interventions conducted last year.

“We share with Japan an important interest in seeing a stronger
commitment by the G20, by the emerging economies of the G20, for more
flexible exchange rates,” he said. “It’s important because we want to
see those emerging market currencies that are undervalued continue to
appreciate against major currencies, against the dollar and the euro.”

Asked if Washington will consider exempting Japanese banks from a
proposed ban on dealing with Iran’s central bank, Geithner replied that
the U.S. is exploring ways to cut off Iran’s financial system and reduce
its oil revenue.

“We are in early, initial stages in consulting with our allies both
in Europe and Japan and around the world on how best to achieve these
objectives,” he said.

Azumi noted that crude oil imports from Iran account for about 10%
of Japan’s overall crude purchases, which have been reduced by 40% in
the past five years in protest against Iran’s nuclear development
program.

“We will act to lower the share of Iranian crude oil imports
further from the current 10% as soon as possible,” he said.

tokyo@marketnews.com
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